Building and Construction Procurement - Roles and Responsibilities

General

Contracts relating to building and
construction (including roads and bridges) primarily involve four
entities - the Principal, the Contractor, the Superintendent and Subcontractors. In turn,
these entities enter into the following contracts:

between the Principal and the Contractor;

between the Principal and the Superintendent (where the
Superintendent is an independent Contractor or Consultant); and

between the Contractor and the Subcontractor(s).

Principal

The Status of the Principal to a Construction Contract

Except where a statute specifically confers
contracting power (eg upon the Director of Housing under the
Homes Act 1935 or upon a corporate body such as the Forestry
Corporation under the Forestry Act 1920), the appropriate
party to a contract which is to be entered into by the Crown is
"The Crown in Right of Tasmania" (Treasurer's
Instruction 1203).

This means that 'The Crown in Right of
Tasmania' should be named as the contracting party
(Principal) and execution of the contract on behalf of the State
will be either by the Minister or such officer as delegated by the
Minister in accordance with Treasurer's
Instruction 1203.

Procurement for all building and construction
projects must be undertaken in accordance with the
Treasurer's Instructions and any relevant Procurement
Practice Manuals.

The Principal's
obligations

The Principal has obligations prior to the
award of the contract, and further obligations once the contract is
in place.

The Principal's initial obligations
prior to the award of the contract include:

preparation of the client brief;

preparation of the functional brief;

preparation of the design brief;

preparation of the detail design and documentation;

possession of the site; and

selection and appointment of a Contractor.

Under AS 4120-1994 Code of Tendering,
the Principal also has an obligation to:

arrange project funding before commencing the procurement
process;

proceed with the project;

advise persons submitting offers of the evaluation criteria;

ensure that the conditions of tendering are the same for each
potential supplier;

ensure that appropriate addenda procedures are in place;

provide all information known to the Principal which is relevant to
enable potential suppliers to evaluate the risks in the
project;

ensure that reasonable time is allowed, for both the procurement
process and the construction; and

provide positive encouragement to potential suppliers to
incorporate maximum innovation while still satisfying the
Principal's basic commercial and technical objectives by
allowing them to submit options in addition to a conforming
offer.

Under the contract between the Principal and
the Contractor, the Principal's obligations include:

where the Principal is responsible for the insurance, the effecting
of a policy of insurance for the works and/or public liability;

the appointment of a Superintendent;

the provision of access to the site; the timely supply of
information to the Contractor; where relevant, the assigning of a
designated or nominated sub-contract;

the making of progress or final payments;

avoiding variations;

retention and release of security and/or retention monies.

The Principal's Representative

The Principal for building construction
contracts is "The Crown in Right of Tasmania".

The Principal delegates powers, duties and
discretions under the contract to the Principal's
representative and the Superintendent, but these delegations do not
prevent the exercise of such powers, duties, discretions or
authorities by the Principal himself.

The delegations are usually made to persons
who are skilled and experienced in building or road and bridge
construction and who are able to offer the best advice and service
to the Principal.

The role of Principal's representative
is very important and the appointee must be a person who has expert
knowledge of the building and construction industry and who is able
to give the Principal the best advice, protection and service.

The Principal's representative is the
person stated in the Annexure to the General Conditions of
Contract (the Annexure) and is appointed, in writing, by
the Principal to be the Principal's representative and
notified as such in writing to the Contractor by the Principal.

The Principal's representative will come
from the agency.

The delegation as Principal's
representative carries with it all power and duties vested in the
Principal under the contract but usually with the exception of two
clauses. They are:

Clause 6.2 The right to execute the Formal Instrument of
Agreement.

Clause 44 Default or bankruptcy of the Contractor.

Superintendent

The Superintendent

Clause 23 of the General Conditions of
Contract, AS 2124-1992, states that the Principal shall ensure
that at all times there is a Superintendent and that in the
exercise of the functions of the Superintendent under the contract,
the Superintendent:

acts honestly and fairly;

acts within the time prescribed under the contract or, when no time
is prescribed, within a reasonable time; and

arrives at a reasonable measure or value of work, quantities or
time.

The Superintendent is the person stated in the
Annexure as the Superintendent or other person from time to
time appointed in writing by the Principal to be the Superintendent
and notified as such in writing to the Contractor by the Principal;
and this, so far as concerns the functions that can be exercised by
a Superintendent's representative, includes a
Superintendent's representative.

The obligations of the Superintendent apply
equally to the role of the Superintendent as agent for the
Principal and to the role of the Superintendent as certifier under
the contract.

It is considered appropriate that the
procuring agency has a role and thus a responsibility in the
performance of the contract. Therefore, under the procurement
arrangements, the role of Superintendent will be the responsibility
of the agency. The agency is responsible for ensuring that a
suitably qualified and experienced Superintendent is appointed for
all major or high risk projects.

The terms of the engagement are for the
Principal to determine. The Principal can appoint a State Service
employee, or any other person, as the Superintendent. The terms of
appointment would require the Superintendent to fulfil the
functions set out under the terms of the contract.

The agency should be quite clear in the
appointment of a Superintendent whether the Superintendent is
acting as an independent certifier or as an agent of the Principal,
or both.

The Superintendent as administrator of the
contract has the dual role of acting as agent for the Principal in
conveying the Principal's instructions to the Contractor, and
as certifier for the purpose of issuing certificates and making
decisions as to reasonable measures or values of work, quantities
or time.

The functions of the Superintendent vary
depending on the form of the contract utilised. The degree to which
the Principal and the Contractor are bound by the determinations of
the Superintendent also varies depending on the form of contract
employed.

Superintendent as Certifier

The Superintendent has an obligation to act
independently in the certifying functions, these functions usually
include:

the proper execution and completion of the works;

quality of materials and workmanship;

assessing extensions of time;

assessing extensions of time costs;

issuing the practical completion certificate;

assessing progress certificates;

assessing liquidated damages;

valuation of variations;

assessing costs arising from latent conditions;

costs of postponement of work;

costs of disposal of minerals and antiquities; and

issuing final payment certificate.

Superintendent as Agent

The Superintendent, as agent of the Principal,
could be authorised to issue instructions to the Contractor in
respect of:

the carrying out of the works;

extent of variations;

discrepancies, ambiguities, errors or other faults in the contract
documents;

matters arising from site conditions;

the identification of nominated Subcontractors and suppliers;

provisional sums;

the omission or execution of work;

the removal of persons from the works;

statutory requirements;

substitute materials or workmanship;

the opening-up of work covered up and testing of materials or
goods;

the removal and/or re-execution of any work;

the making good of any defects in the works;

the disposal of minerals, relics or antiquities;

non-correction of defects; and

the postponement of any work to be executed under the provisions of
the contract.

The extent of the Superintendent's
obligations to issue instructions is defined by the terms of the
Superintendent's appointment, and by the terms of the
contract.

In addition, the Superintendent would
normally:

issue instructions and directions to the Contractor;

supply copies of documents in accordance with the contract;

supply further information in accordance with the contract; and

make all necessary decisions required to be made by the
Superintendent.

Superintendent's Representative

The General Conditions of Contract, Clause
23, AS 2124-1992, states that the Principal shall ensure at all
times that there is a Superintendent. The superintendent is the
person named in the Annexure to the General Conditions of
Contract as the Superintendent. The Superintendent may appoint
a Superintendent's representative, in writing, to exercise
defined powers or duties on the Superintendent's behalf.

Contractor

The obligation of the Contractor is the
performance of the contract works, in accordance with the terms and
conditions of the contract, and in accordance with the General
Conditions of Contract, specifications and drawings. The
obligations of the Contractor would normally include:

compliance with all statutory, legal and award requirements
relative to the works;

the provision of competent, experienced management and supervision
throughout the contract. The supply and organisation of the
necessary labour to perform the works within the contract
period;

the supply of all materials required to complete the works as
specified;

the provision and maintenance of all site facilities to enable the
efficient performance of the works;

the establishment, and updating, of the overall contract program
and supplementary sub-contract programs;

the management of industrial relations in accordance with the
relevant awards;

the maintenance of site safety in respect of all personnel on site
and the public generally who may be affected by the works. In this
regard, the Contractor shall ensure that all personnel on site are
adequately trained and observe safe working procedures;

the administration of the contract works, such as financial
management, co-ordination of all aspects of the works and
maintenance of all necessary site and contract records; and

the implementation of quality assurance systems for aspects of the
works when specified.

Subcontractor

The Contractor enters into sub-contracts for
various components of the work under the contract. The terms of the
sub-contract would normally require the Subcontractor to:

complete the sub-contracted works -

within a time;

to a price;

to a specified quality; and

in accordance with the provisions of the sub-contract, the drawings
and specifications;

provide all labour and material necessary for the performance and
completion of works as above;

meet specified performance requirements;

co-operate with those entitled to possession of the site in its
use;

provide such information and assistance as may reasonably be
required for the Contractor to program and co-ordinate the
works;

manage the industrial relations in respect of the
Subcontractor's own employees in co-operation with and having
due regard for the other employers on site and the Principal;

keep the workplace safe, adopt safe methods of work, and comply
with the common law and the Work Health and Safety
legislation;

co-operate with the Contractor in performance of the works in
general;

where design is required of the Subcontractor, provide competent
design;

provide the specified quality assurance system or quality control
procedures; and

comply with awards, statutes and standards.

The client agency is not specifically
mentioned in the contract documents, but the Superintendent is
generally engaged by the agency to prepare the design and document
the tender. The Superintendent is required to administer the
contract and report to the agency on all matters pertaining to the
project.

Role of the Department of Treasury and
Finance

The Department of Treasury and Finance has
developed Prequalification Criteria (PQC) for contractors, selected
specialist subcontractors and consultants. The criteria are to
"best practice" standards and similar processes are in
use in other jurisdictions.

The Department of Treasury and Finance has an
interface role which encompasses industry leadership to effect the
Government's commitment to building and construction industry
reform by providing initiative in the development and
implementation of an integrated package of reforms which have
industry-wide relevance. This includes developing procedures,
standards and guidelines which will engender a consistent and
professional approach by the State Sector to construction tendering
and contracts practice. A set of strategies has been developed for
the procurement of building works whereby all tenders for
particular categories and values of work are called with the
provision that only prequalified contractors may tender.

Parliamentary Standing
Committee on Public Works

The
Parliamentary Standing Committee on Public Works approval process
is a legislative requirement for public works projects valued in
excess of $5 000 000. The review process conducted by the Committee
is an integral part of the legal framework for asset procurement by
the Tasmanian Government. The Committee's charter is set out
in the Public Works Committee Act 1914.

The Committee includes Members of the
Government, Opposition and Independents drawn from both the House
of Assembly and the Legislative Council. The Committee reports to
the House of Assembly or, if the House is not sitting, His
Excellency the Governor.

The Committee scrutinises major Government
public works projects, and in particular reports on the
"...necessity or advisability of carrying [the project]
out" (Public Works Committee Act, Section 15(2b)) and
on the "present and prospective public value of the
work" (Public Works Committee Act, Section
15(2c)).

For more information refer to The Process for
the Referral of a Project to the Parliamentary Standing Committee on Public Works.

This page has been developed by the Department of Treasury and Finance.